Volume 12, Issue 1

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January - March 2010 · Published: Apr 2010

Last quarter we focused on remarks by US President Barack Obama and Secretary of State Hillary Clinton proclaiming that “America is back in Asia,” an obvious dig at real and perceived neglect of Asia by the previous administration. This quarter, both were forced to postpone planned trips to Asia although, in Secretary Clinton’s case, not before giving a major Asia policy address in Honolulu. This quarter also ended the same as last, amid hints that Pyongyang really would, at some not too distant point (but not this past quarter), return to six-party deliberations.

On a more positive note, it looks like arms control agreements are on the way back, following the announcement that the US and Russia had finally come to terms on a new strategic arms agreement, to be signed by both presidents in April. Speculation about the “changing balance of power” in Asia also continues as a result of China’s economic resilience and apparent newfound confidence, although it still seems premature to announce that the Middle Kingdom is back, given the challenges highlighted at this year’s National Peoples’ Congress. Political normalcy also appears to be a long way from returning to Bangkok where the “red shirts” have once again taken to the street, prompting the government to declare a state of emergency.

Prime Minister Hatoyama Yukio moved to implement his domestic policy agenda with an eye toward the Upper House elections this summer but watched his approval rating fall as he and members of his ruling Democratic Party of Japan (DPJ) were beset by political fundraising scandals.  The impasse over the relocation of Marine Air Station Futenma continued to dominate the bilateral agenda and alternative proposals put forth by the Hatoyama government failed to advance the discussion.  Concerns about barriers to US exports and the restructuring of Japan Post emerged in commentary by the Obama administration and congressional leaders but a joint statement highlighting cooperation on the Asia-Pacific Economic Cooperation forum (APEC) reinforced the economic pillar of the relationship.  The Toyota hearings in Congress were covered extensively by media in both countries but did not have an immediate impact on US-Japan relations. However, the recall issue and other developments point to potentially negative perceptions that could cloud official efforts to build a comprehensive framework for the alliance over the course of the year, the 50th anniversary of the 1960 US-Japan Security Treaty.

US - China

January — March 2010

The Honeymoon Ends

After a relatively smooth period in US-China relations through the first year of the Obama administration, the “honeymoon” ended in the first quarter of 2010.  The new year brought new frictions and returned to the spotlight many problem areas.  The quarter began with an unexpected announcement from an unlikely player in China-US relations: Google, the internet giant, reported extensive hacking of its networks traced back to China and then redirected Google.cn users to its Hong Kong site to evade Chinese censorship.  Tensions were further stoked by the administration’s notification to Congress of a major weapons sale to Taiwan and President Obama’s meeting with the Dalai Lama. Throughout the quarter, economic frictions intensified, particularly over the valuation of China’s currency.  Despite these numerous difficulties, the quarter closed with the pendulum swinging back toward the center.  At the end of March, President Obama and Deputy Secretary of State James Steinberg both reaffirmed the US commitment to a positive relationship with China; Beijing announced that President Hu would attend a major international nuclear security summit in the US in April 2010; and Obama and Hu, in a friendly phone call, renewed their determination to sustain healthy and stable ties.

The first quarter of 2010 set the stage for what should be a busy year in US-Korea relations.  The Six-Party Talks remain stalled, although dire conditions in the North may force Kim Jong-il back to negotiations soon. While North Korea continues to demand concessions before a return to talks, the US shows no sign of caving in.  In South Korea, there was a flurry of mixed signals on whether the transfer of wartime operational control (OPCON) to Seoul scheduled to be completed in 2012 would go ahead as planned.  Prospects for the US-ROK free trade agreement got a boost from President Obama and his administration, however, it remains uncertain when the deal will move to Congress for ratification. Finally, the issue of spent nuclear fuel reprocessing in South Korea has made its way to the forefront of US-Korea relations, where it will likely remain for some years.

After banner initiatives in US policy toward Southeast Asia were unveiled in 2009 – the US-ASEAN Leaders Meeting, signing the ASEAN Treaty of Amity and Cooperation, and a 45-degree change in Burma policy that added engagement to sanctions – a loss of momentum in early 2010 was hardly surprising.  President Obama’s decision to delay his long-awaited trip to Indonesia twice in March added to the impression of a slump in relations with the region.  The administration proved to be prescient in its warning last fall that greater engagement with the Burmese regime would not likely reap short-term gains when the junta announced restrictive election laws.  However, in the first quarter of 2010 the US also moved forward on two regional initiatives – strengthening its interest in the TransPacific Trade Partnership, which could be a route to trade liberalization with several Southeast Asian countries, and preparing to establish a Permanent Mission to ASEAN.  Despite Bangkok’s ongoing political crisis and a new wave of “red shirt” protests, the US and Thailand implemented new rounds of two multilateral military exercises in this quarter, including the flagship Cobra Gold.  At the end of the quarter the US and Vietnam signed a landmark Memorandum of Understanding on the development of civilian nuclear power facilities, a bilateral segue to the multilateral nuclear summit that Obama will host with 43 heads of state in mid-April.

The China-ASEAN Free Trade Agreement (CAFTA), inaugurated on Jan. 1, marked the highlight of a quarter featuring otherwise slow Chinese-Southeast Asian interaction during the winter months. Premier Wen Jiabao did mention the trade accord in his report to the National People’s Congress in March, but official Chinese media accounts of interviews and commentary by Foreign Minister Yang Jiechi this quarter did not mention ASEAN or Southeast Asia in inventories of Chinese foreign policy priorities in 2010. In a visit receiving low-keyed and delayed treatment in official Chinese media, State Counselor Dai Bingguo, China’s senior foreign policy expert, traveled to ASEAN headquarters in Jakarta to give a speech in late January that highlighted the positive aspects of Chinese-ASEAN relations as well as important elements in China’s policy in Asia. Included in foreign assessments of China’s rising prominence in Southeast Asia was a hearing by a US congressional commission in February featuring views of two US administration officials and eight experts offering mixed conclusions. Chinese statements this quarter expressing strong differences with the US thus far have not shown much impact on Chinese relations with Southeast Asia.

The interaction between economic negotiations and Taiwan domestic politics will dominate cross-Strait relations this year.  Formal negotiation of an Economic Cooperation Framework Agreement (ECFA) began in January and both sides now talk hopefully of completing the negotiations by June.   On Taiwan, recent election losses make timely conclusion of the ECFA on terms welcomed by Taiwan voters important for President Ma Ying-jeou and the Kuomintang (KMT) party’s political fortunes.  The announcement of a US arms sales package in January was welcomed by Ma, but predictably created tensions in US-China relations – tensions that raise the stakes when the Obama administration considers Taiwan’s request for F-16 C/D aircraft.

2010 is a year of anniversaries on the Korean Peninsula, many of them miserable. It is the centenary of Japan’s occupation of Korea in 1910, an event unlikely to be much marked on either side of the Sea of No Agreed Name, given how bitter Korean memories remain. This June marks 60 years since a by-then partitioned peninsula erupted into a civil war which technically is not over, since the 1953 Armistice Agreement was never followed by a peace treaty. For South Koreans, April 1960 celebrates the ouster of their authoritarian first leader, Syngman Rhee, in an all too brief democratic interlude before soldiers seized power in Seoul. Twenty years later, May 1980 marks the bloody suppression of a rising against military dictatorship in Gwangju in the southwestern Jeolla region, still the heartland of political opposition in South Korea. Seven years later the generals were forced back to barracks for good – a rare achievement in Asia – and a sometimes fractious democracy has since grown strong roots.

China and North Korea sustained high-level contacts during the quarter, but there seems to be little to show for it. Wang Jiarui, head of the International Department of the Communist Party of China (CPC) Central Committee, met Kim Jong-il in Pyongyang and delivered a letter from President Hu Jintao, reportedly extending an invitation to Kim to visit China.  Following the visit, the Chinese Foreign Ministry confirmed Pyongyang’s “persistent stance” toward denuclearization while Hu affirmed that friendly ties is China’s “consistent policy” toward Pyongyang.  Two weeks later Kim Yong-il, director of the International Affairs Department of the Workers’ Party of Korea (WPK) Central Committee, visited Beijing, where he met President Hu.  North Korea’s major push to attract foreign investment appears to involve potential economic deals that Beijing has claimed do not violate UN resolutions toward the North. Meanwhile, Chinese leaders presented a positive outlook for the resumption of Six-Party Talks on the sidelines of the annual session of the National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC) in March.  Having received the title of representative for Korean Peninsula Affairs, China’s lead representative to the Six-Party Talks Wu Dawei stated that talks might resume before July this year in light of favorable diplomatic contacts with Pyongyang.  Foreign Minister Yang Jiechi expressed support for improved inter-Korean and US-DPRK ties.  China and South Korea officially launched Visit China Year 2010, pledging to strengthen their strategic cooperative partnership through intensified diplomatic, cultural, and economic exchanges.  ROK Foreign Minister Yu Myung-hwan held talks with Premier Wen Jiabao and Foreign Minister Yang Jiechi in Beijing.

The final report of the Japan-China Joint Study of History project, which was composed of studies by individual Japanese and Chinese historians and not a consensus document, was released at the end of January.  While differences remained over issues related to Nanjing and postwar history, both sides expressed satisfaction with the three-year effort and committed to follow-on studies. At the same time, efforts to reach an implementing agreement on joint development in the East China Sea failed to make progress.  Even the decline to single-digit growth in China’s 2010 defense budget, while welcomed in Japan, was met with skepticism and calls for greater transparency. Meanwhile, China protested Japan’s appropriations to support conservation and port construction on Okinotorishima. Then, with hopes fading in Japan for a resolution of the two-year running controversy over contaminated  gyoza imported from China, Chinese authorities at the end of March announced the arrest of a former employee at the Tianyang Food Plant in Hebei Province who admitted under questioning that he had injected pesticide into the frozen gyoza.

Japan - Korea

January — March 2010

Same As It Ever Was

Korea-Japan relations have foundered over territorial and historical disputes for quite some time. Indeed, much of this quarter’s report could have been written in 2004, or perhaps even earlier. Yet, we dutifully report the Japanese government’s latest claim, the South Korean government’s latest protest against that claim, and so on, while also reporting the increasing trade, travel, and institutional relations between the two countries. Which leads to a question: how consequential are these territorial disputes? The mere fact that Japanese and Koreans think they are important enough to alter textbooks and put claims on the Foreign Ministry website makes them consequential.  However, do these claims have an impact on the other military, diplomatic, or economic affairs in the region? One could make an argument that despite the sturm und drang over who owns Dokdo/Takeshima, those affairs have not yet led to different policies in other areas, and certainly nobody thinks the territorial disputes might lead to actual war. This is not the place to discuss that question in depth, but it is one of the more intriguing questions that occurs to us as we, yet again, write about the same issues.

For most of the first quarter, “uneventful” was the best description for bilateral relations between Russia and China. This is especially true when contrasted with the high-profile events in 2009 when bilateral trade declined 31 percent from $56.8 billion to $38.8 billion, Russia sank a Chinese cargo ship in February, the energy “deal of the century” was concluded in April, Moscow’s Cherkizov Market was abruptly closed in June, the 60th anniversary of diplomatic relations was celebrated in October, and the China-Central Asian gas line and Russia’s Eastern Siberia-Pacific Ocean oil pipeline were opened in December. Only in late March, with the five-day visit by Chinese Vice President Xi Jinping to Russia, was there a return from mutual “hibernation” and an “obsession” with the Obama administration’s policies, though for different reasons. Prime Minister Vladimir Putin’s invitation was also seen as a “back-to-the-future” effort to size up Xi, who is poised to assume the leadership spot in China by 2012. For Putin, 2012 is also the time to retake the Russian presidency, if he desires to do so.

After a decade of rising regionalist aspirations and a flurry of community-building initiatives, the past year and a half has seen a slight shift in the momentum and direction of Asian regionalism.   While the signing of regional free trade agreements continues apace and discussions on regional cooperative mechanisms proceed unabated, the perceptions and political goals of many in the region have been recalibrated in the face of new challenges and new opportunities. By far, the biggest challenge was the global economic crisis, which had a mixed impact on Asian regionalism.  On one hand, it spurred calls for regional action, much in the way of the financial crisis that hit Asia hard in 1997-98.  Moreover, the relatively swift recovery of Asian economies seemed to highlight the fact that world economic power is shifting to East Asia.   On the other hand, crisis revealed the extent to which East Asia remains deeply integrated with the global economy, in both trade and finance, and it called into question the relevance of regional solutions for dealing with global challenges.

New opportunities arose with the election of new political leaders in Australia, Japan, and the US, each of whom placed regional initiatives high on their political agenda. Australia’s Kevin Rudd and Japan’s Hatoyama Yukio laid out competing grand visions for regional architecture that engaged Asian diplomats and policy analysts in lofty and abstract debates about institutional design and the proper membership and pacing for community-building. The change in the US had an even greater impact on regional dynamics.  After years of Bush administration policies that were perceived, fairly or not, as showing a lack of US interest in regional engagement, the Obama team took every opportunity to deliver the message that “the US is back” in Asia.  Its outreach to ASEAN has been particularly aggressive, raising the hopes and expectations of those who would like to see greater US involvement in regional community-building.

On the ground, however, progress on achieving tangible cooperation in regional frameworks, both trans-Pacific and East Asian, has been meager at best.  The global economic crisis gave rise to the G20 that, while elevating the symbolic weight of Asian economies in global governance, has also created institutional competition for regional frameworks.  Regional economic integration faces emerging and unresolved challenges, as the noodle bowl of bilateral free trade agreements (FTAs) grows more tangled and the impact of Chinese economic competition deepens.  Meanwhile, effective frameworks for multilateral security cooperation remain elusive.

Daily Digest

Nikkei Asia – Yellen cites China overproduction as G7 ministers meeting opens

As Group of Seven finance ministers and central bank governors meet in Italy from Thursday, a major topic is the fragmentation of world trade, a problem that U.S. and Europe blame partly on overproduction in China.

Associated Press – Malaysia PM says his country keeps good ties with US but not China phobia, wants to engage both

Malaysian Prime Minister Anwar Ibrahim said Thursday his country does not have a “China-phobia” policy and wants to engage both Beijing and Washington, expressing hopes for both powers to resolve their differences.

Associated Press – Taiwan tracks dozens of Chinese warplanes and navy vessels off its coast on 2nd day of drills

Taiwan tracked dozens of Chinese warplanes and navy vessels off its coast Friday on the second day of a large exercise China’s People’s Liberation Army held in response to the island’s new leadership.

The Diplomat – Will Frozen China-South Korea Relations Thaw as Seoul Hosts Upcoming Trilateral Summit?

The trilateral relationship between the United States, Japan, and South Korea has gained significant attention, especially following their historic meeting at Camp David last August.

Reuters – China’s foreign minister calls Taiwan’s new president ‘disgraceful’

Chinese Foreign Minister Wang Yi called Taiwan’s newly-inaugurated President Lai Ching-te “disgraceful” on Tuesday, stepping up Beijing’s rhetoric just a day after he took office.

Reuters – New Taiwanese president calls on China to stop its threats

Taiwan President Lai Ching-te asked China on Monday to stop its military and political threats, saying in his inauguration speech that peace was the only choice and that Beijing had to respect the choice of the Taiwanese people.